An American civilian contractor has described scenes of panic and hysteria last year as Filipino construction workers were told that they were on a plane bound for Baghdad rather than Dubai.

Passengers jumped out of their seats screaming in protest until a gun-toting air steward ordered them to sit down, claimed Rory Mayberry, an emergency medical technician travelling on the same flight. Mayberry said the men were “kidnapped” to build America’s luxurious new embassy in Baghdad’s green zone. He gave his account to a congressional committee investigating allegations of fraud at what will be America’s largest diplomatic mission.

The £300m fortified embassy - a cluster of 21 high-rise towers occupying 104 acres on the west bank of the River Tigris - will house 3,000 staff. It is regarded as one of the most dangerous building projects in the world.

Mayberry, who worked briefly at the site, testified that he accompanied 51 Filipino workers who thought they were going to construct hotels in Dubai until 10 minutes into their flight.

In March 2006 Mayberry and the Filipinos boarded a plane in Kuwait chartered for First Kuwaiti General Trading and Contracting - the company in charge of the massive project. Mayberry described the anger that ensued when the men realised they had been tricked and were not bound for Dubai as their boarding passes stated. “When the plane took off and the captain announced we were headed for Baghdad, all you-know-what broke loose. People started shouting. It wasn’t until a security guy working for First Kuwaiti waved an MP5 [sub-machinegun] in the air that people settled down. They realised they had no choice,” he said.

“Let me spell it out clearly. I were being smuggled past US security forces.” Mayberry said he remembered one passenger telling him how excited he was about his new job in the United Arab Emir-ates as a telephone repair man. Instead the men found themselves on a construction site in appalling conditions, living in cramped trailers. His claims were backed by John Owens, an architectural expert with experience on US embassy projects. “When flying from Kuwait to Baghdad, I saw a bunch of workers with tickets to Dubai. Mine was the only one that said Baghdad,” he said. “When I asked the First Kuwaiti manager, he said, ‘Shhh, don’t say anything. If Kuwaiti customs knows they’re going to Iraq, they won’t let them on the plane’.”

Owens testified that conditions in the camp were “deplorable, beyond what any man should tolerate”. Workers from Asia and west Africa were paid between £120-£150 a month for working 12 hours a day, seven days a week, he claimed.

Congressman Henry Wax-man, Democratic chairman of the House oversight committee investigating the claims, said: “The project has been beset by allegations that the prime contractor, First Kuwaiti, has used forced labour to build the embassy, violating the laws against human trafficking and sending exactly the wrong message to Iraq and the rest of the world about US respect for human rights.”

First Kuwaiti denied any wrongdoing. A spokesman said: “As demonstrated in the hearing, these claims have been investigated by the inspector-general of the US Department of State and the multinational Force-Iraq, both of whom had verified that First Kuwaiti is not involved in labour trafficking.”

Howard Krongard, the State Department inspector general who visited the site in September, said he found no evidence to back the contractors’ allegations, but admitted his investigation was “limited in scope” and acknowledged the company had three months’ notice of his visit. An earlier Pentagon investigation into contractors operating in Iraq said it had identified abuses, some of which were “widespread”. Gloria Macapagal-Arroyo, the Philippines president, has ordered a team to go to the Middle East to investigate.